High Court Debates Whether to Allow Discrimination Suit Against Domino's Pizza

In a case that could affect lawsuits alleging discrimination in contracting, a Nevada businessman urged the Supreme Court on Tuesday to let him sue Domino's Pizza for racial discrimination. The justices confronted the question of whether John McDonald could bring the suit as an individual when it was his company that had a contract with Domino's. Several justices sounded skeptical of allowing such lawsuits by people who were not party to the contract at issue.

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In a case that could affect lawsuits alleging discrimination in contracting, a Nevada businessman urged the Supreme Court Tuesday to let him sue Domino’s Pizza for racial discrimination even though the chain did not have a contract with him individually. John McDonald says Domino’s failed to honor its 1997 contracts with his company, JWM Investments Inc., because he is black. Domino’s had contracted with the company to build four pizza franchises in the Las Vegas area. Domino’s denies racial discrimination was involved. Company officials have accused McDonald of causing delays and failing to hold up his end of the deal. At issue before the Supreme Court was not whether McDonald was the target of discrimination. Instead, justices confronted the legal question of whether McDonald could bring the suit as an individual when it was his company that had a contract with Domino’s. In a case that has prompted some 17 state attorneys general to take sides, McDonald sued under a provision of an 1866 civil rights law that protects equal rights in contracting. Several justices sounded skeptical of allowing such lawsuits by people who were not party to the contract at issue. If that were allowed, Justice Antonin Scalia wondered, what would happen if General Motors decided not to do business with companies that employ many minorities? “You’re saying that every minority employee of all of the companies with whom GM didn’t do business would automatically have a cause of action?” Scalia asked McDonald’s attorney, Allen Lichtenstein, general counsel of the American Civil Liberties Union of Nevada. But some justices also suggested there could be contracting discrimination cases where a minority should be able to sue directly. “What if you have a case where a company says we aren’t going to deal with any company” with a black chief executive, new Chief Justice John Roberts asked Domino’s attorney Maureen Mahoney. “Shouldn’t he have a right to bring a claim?” Lichtenstein said that McDonald, who is president and sole shareholder of JWM, was directly targeted for discrimination and should be able to rely on civil rights law for protection. “The discrimination was aimed at John McDonald. Domino’s itself viewed JWM as John McDonald,” Lichtenstein said. McDonald says he believes he was the only black developer hired by Domino’s to build restaurants in the southwestern United States. He contends that at one point, a company official threatened him with financial repercussions if he pursued the contracts and said to him: “I don’t like dealing with you people anyway.” “The statement ‘we don’t want to do business with you people’ — you people isn’t anyone but John McDonald,” Lichtenstein said. But Domino’s attorney Maureen Mahoney noted that Domino’s already had paid $45,000 to settle a lawsuit JWM brought over the contract dispute while in bankruptcy proceedings. Allowing McDonald to pursue an individual civil rights claim would open the door to a rush of lawsuits by people only tangentially connected to the contracts involved. “Mr. McDonald did not hold any rights under the contract between his company” and Domino’s, Mahoney said. “It would create problems down the road to recognize this kind of theory,” she said. Seven state attorneys general and a coalition of civil rights groups filed friend of the court briefs siding with McDonald, arguing the high court’s decision could have a profound impact on the rights of minority business owners. Ten states sided with Domino’s, as did the U.S. Chamber of Commerce and the Equal Employment Advisory Council, which represents large employers, warning of the potential for too much litigation if the Court sides with McDonald. The case is Domino’s Pizza, Inc. v. John McDonald, 04-593. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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